Good afternoon, everyone. Thank you very much for joining us at FY '25, the period ending March 31, earning call for Terumo. Thank you very much for your time. Today, we will talk about the overview of the financial from CFO Hagimoto, and we will have a Q&A session after the presentation. We are planning to finish it in about 45 minutes. In webinar, we have simultaneous translation services available. You can listen in either Japanese or English, whichever you want. [Operator Instructions]. The shared slides are only in Japanese. English version is also available for documentation on our website. If we have a problem in streaming, we will let you know with an e-mail. And before our presentation today, I'd like to just have some information or there's a disclaimer. These are the forecasting projections of the future and some of the comments will be projection comes with risks or uncertainties for the future projection. The actual result could be not exact aligned with our forecast or projection. With that, I'd like to invite Hagimoto-san to do the presentation of our financial announcement.

Yes. I am -- good day. I'm Hagimoto, CFO. Thank you for joining our earnings call today. Let me walk you through. Today, with Hagimoto, me, Otaka, who is responsible for -- is for the IR will be joining us from April. We have a IR office and FP&A and also policies are set up by financial team. We actually have this new teams being set up for the business management. Miyoshi is responsible for CMV which is pushing forward more technologies. Otaka-san and I will be responsible for communicating about the financial results. Thank you in advance for your support. With that, I'd like to make presentations on the financial results for FY '25 Q1. This is the highlight of quarter. First quarter highlight. We continue to benefit from favorable business environment, achieving record-high quarterly revenue of JPY 260 billion for Q1. In particular, demand in the U.S. remained strong. Total revenue grew by 6% excluding foreign exchange effect, we are progressing well against our full year guidance, which we announced in May. Operating profit -- adjusted operating profit and profit for the year all reached record high for a single quarter. In addition to increase in revenue, profits are also growing at a pace that exceeds revenue growth due to pricing measures and appropriate cost control being implemented globally, and we are steadily improving profitability toward our operating profit target GS26. Next slide, please. This is P&L and our free cash flow results. Revenue was driven by CMD and TBCT companies. Despite negative currency impact, we achieved JPY 260 billion in revenue, surpassing last year's Q1, which are temporary demand strikes. Operating -- and for operating profit, too, grew significantly faster than revenue, reaching a record JPY 55.9 billion. This was supported by improved gross margin from pricing strategies, effective cost management as well as favorable currency and onetime gains. And free cash flow was JPY 10.5 billion, a decrease of JPY 4.2 billion year-on-year. This was mainly due to an increase in inventories as a result of business expansion and impact from tariffs, but we will continue to maximize free cash flow through appropriate inventory management. Next slide, please. And this is about operating profit variance analysis and GP increment by sales increase was led by TIS and Global Blood Solutions, progressing as planned against full year targets. Gross margin price is the next point. C&V pricing strategy contributed a lot to profit increase, especially price increases in the U.S. and delayed VBP in China exceeded our expectations. Profitability improvement measures also steadily delivering results. SG&A expenses have increased as expected, along with business expansion. R&D expenses are flat -- it was flat year-on-year due to timing differences with no change to full year forecast. Foreign exchange impact were negative on a flow basis, but positive on stock basis contributing to profit growth. Next slide, please. This is revenue by revenue -- revenue by region. In the Americas, double-digit growth in local currency with all companies contributing strongly driving global sales. So the -- was very -- driven the global sales very much. In Europe, strong performance of PLAJEX drove Pharmaceutical segment's growth. TBCT saw a temporary revenue decline due to delayed order in some regions with recovery, although expected going forward. In Japan, C&V, especially neuro achieved double-digit growth, driving the entire performance. TMCS, on the other hand, experienced temporary revenue decline due to certain business transfer and supply chain. In China, Neuro saw significant growth, thanks to the successful expansion of sales channel through VBP. TIS partially offset VBP- driven price decline with volume increases. Asia, C&V achieved revenue growth. Pharmaceuticals and Global Blood Solutions saw temporary decline due to delay in some bidding time lines. Next slide, please. I will now explain results by the company. First is the cardiovascular company. Revenue grew 7% on a local currency basis, driven by stronger performance in the U.S. TIS and Neuro led the growth. Aortic segment saw a temporary decline due to supply issues, with its surgical graft product line, but it is now resolved. On the other hand, hybrid products expanded steadily, improving profitability. Operating margin improved by 5 points to 29%. Various initiatives, such as the pricing strategies, the profitability improvement measures and the review of unprofitable regions have contributed. ForEx was positive on the stock, resulting in higher-than-expected profit growth. Next slide, please. TMCS Medical Care Solutions, revenue declined temporarily due to business divestitures in the hospital care and the supply issues for some products. Pricing strategies since April are progressing well. In Pharmaceuticals, domestic CDMO deliveries were delayed, causing a Q1 sales decline, while projects performed strongly overseas, resulting in revenue growth. Profits benefited from the pricing measures and the foreign exchange rates with increase in the profits on an actual exchange rate basis. However, lower sales and production delays in pharmaceuticals were negative factors. Profit decreased on a local currency basis. Sales and profits were affected by onetime factors, but we expect to achieve the planned increase in the sales and profits for the full fiscal year. Next slide, please. TBCT, Blood and Cell Technologies. Revenue grew significantly in the plasma innovation under the Global Blood Solutions. Rika deployment to existing customers is complete with further revenue growth expected as operations optimize. Core business is progressing as expected. Global Therapy Innovation saw increased demand for cell collection in cell and gene therapy, especially in the U.S., along with the replacement demand for certain devices. The profit increase led by improved profitability from higher sales in all of Rika. Next slide, please. Last slide, I will now give an outlook for this fiscal year, regarding the tariff impacts. And the estimated full year impact is around JPY 10 billion, revised down from the previous estimate of JPY 17 billion due to changes in the tariff rates, mainly on imports from Japan. The impact included in Q1 is extremely limited, thanks to local inventory and most of the impact is expected to materialize in the second half of the fiscal year. On the other hand, our fundamentals remain solid. And even excluding ForEx effects, Q1 results exceeded the plan that forms the basis of our full year forecast. Demand is expanding, especially in the U.S. and China, and it is expected to continue Company-wide pricing measures are having a greater-than-expected effect, and we plan to pass on the tariff impact to prices to mitigate that impact. And of course, the situations may not allow us to pass the entire amount during this fiscal year, but we mitigate the tariff impact as much as possible. Considering our strong fundamentals, we maintain guidance for the current fiscal year and work to achieve it. Thank you very much for your attention.

[Operator Instructions]. Together with Hagimoto-san, Otaka-san will also join in Q&A.

Good afternoon, everyone. My name is Otaka, who will be leading the Corporate Strategy and Planning section. Very nice to meet you.

With that, we'd like to start taking your question. We would like to go to SMBC. Tokumoto-san from SMBC Nikko Securities. Please ago ahead and ask.

Yes. This is Tokumoto. So it was -- the actual was quite strong. But I'd like to talk about SG&A and the gross margin. There were some maybe special events that -- because gross margin was 56%, which was quite a good positive. But compared with your expectation, conventionally, how much is the variance from the expectation? And SG&A is slightly smaller than last year. Maybe there's a timing issue on R&D. But in the Q1, I mean, cost control was quite strongly being implemented. Isn't there any risk? Or do you think there is a risk, no risk for SG&A going up in Q2? Can you talk about SG&A gross margin in the first quarter?

Thank you very much for your question. Let me talk about gross margin. 53.3% versus last year -- last year, this quarter is 56%. Fundamental was performing quite well. That was one driver. And the VC score continues that gave us more productivity gain efficiency. That was the reason. But the other one is foreign exchange. As we have highlighted in one of the slides, we have a stock of the internal inventory that actually drove -- contributed for about JPY 2 billion or so. So that is also have some impact to our gross margin. So that is the -- compared with the unit projection at the beginning of the year, we believe this was -- had some upside from our expectation, but it's quite strong in Q1. But to your question, Q2 or in second half, there are going to be some impacts from tariffs as we may expect. SG&A, to the other question. This one is talking about variable cost. And this is growing together in line -- in tandem with the top line sales. But the SG&A is being controlled throughout the year through and through and especially in the upcoming quarters, we are not expecting surprising big substantial increase in SG&A. So we don't expect that.

Okay. Understood. I have a second question in your projection going forward. You mentioned about the impact potentially from tariffs. The impact was minimized than previously been expected, right? And C&V, you are planning to have a price transfer -- passing the prices over to customers. GPU and looking at the group procurement, there were some price changes in the last year, too. And so those additional incremental initiative for prices, why are you confident this is going to go well? In a quarter basis, how much is going to be really being delivered? I mean, the price -- passing prices from the U.S. tariff. Can you talk about your perspective on that?

Yes, last time, we talked about JPY 17.5 billion, but it came down to JPY 10 billion. We adjusted that. Do you know why, right? Tariffs from Japan in the last time, the first 90 days is like 10%; after that, 25%, that was the assumption which we have calculated with. But now it is up to 15% from Japan and that drove down to JPY 10 billion in terms of impact on tariffs. And you also asked about that JPY 10 billion, how is that going to impact throughout the year? Now we do have inventories in the U.S. footprint. We do still have some inventories, right? In the first half in terms of inventories, so the impact from the tariff will be limited. A JPY 2 billion in Q2, JPY 4 billion each for Q3 and Q4, that's our assumption. In total, that will be impact of JPY 10 billion throughout the full year. But let me also talk about price as you asked, especially for C&V, Cardiovascular segment, we -- from last year -- by the way, this is not only limited to tariffs. The team has been passing the increase -- increased the increases from last year and some of which was implemented in the quarter 1, and there's going to be some renewable contract in which will be asking for increasing prices as the timing of renewal comes. So at this point in time, it's not necessarily -- it's a completely new contract agreeing because of tariff? No, it's not. Because C&V has been doing that in their normal operations. I think I just wanted to highlight that because it's important. Let me also talk about the other companies as well. We are -- like want to maximize passing that tariff back to the price points as long as they make sense. So the situation of the category or they're looking at the competitors' moves are going to be assessed while deciding on price increase.

Thank you very much. I'd like to ask Macquarie Capital, Tony Ren, could you ask your question, please?

Can you hear me?

Yes. We can hear you well.

Okay. Perfect. Yes. So the first question is on the LEQEMBI auto-injector pen. So a couple days ago, your customer mentioned this product being prepared for launch. We believe the U.S. FDA should approve the LEQEMBI auto-injector by the end of this month, right? Could you give us some color about what preparation you are making for this pen? On Slide #8, you mentioned there is a temporary delay in some products. I just want to make sure that -- I just want to understand whether that's LEQEMBI.

Yes. So thank you very much for your question. So what we are doing for the preparation on our side is really to make sure that we can provide as a supplier for the materials and the CDMO business. It's more about making sure we can ramp up the production, make sure that all the logistics arrangements are put in place. And those are sort of the key activities that we are taking for the launch of LEQEMBI. In terms of the delayed products, it's not the LEQEMBI product that you've mentioned. It's really more about the other products that we have been shifting that did shift from a calendar point of view when we compare it to a year-on-year basis.

Okay. Very good. Another question is that relates to Slide #7, the Cardio and Vascular business. You -- so on this slide, you had volume growth as well as price increases for Terumo intervention systems which is the biggest growth driver. You had both volume growth as well as price increases. Could you help me understand what are the relative contribution from volume versus price?

So I think it's the impact of the price is quite smaller -- excuse me, it's the other way around. So what we are considering is that the -- about 2/3 of the impact of the growth is coming from the volume increase, 1/3 is the result of the pricing increase that we have seen is sort of the rough differentiation of the price and the volume increase.

Do you think such price increase will be sustainable?

So we've actually had this built into our contract. So the price increase compared to the last fiscal year is we would assume is already kind of quite positive that we can achieve this. The volume is where we would probably see some ups and downs going forward. But like I've mentioned before, we do feel that the increase in -- especially in the TIS business in the U.S. is going to be very strong.

Okay. This would be my last one. So just below the TIS, right, you see Terumo Neuro. So in China, the sales channel expanded with VBP, resulting in a significant increase, right? So typically, in China, when you have VBP, the sales declines dramatically. So can you explain what happened here?

So in terms of the neuro products in China, when VBP was introduced for this area, we actually had a lower market share compared to the current situation. So what took place is that since VBP also determines not just price but also the volume commitment, we were able to take advantage of that volume commitment and increase our prices in China for the neuro products.

Thank you very much for the questions. Let's move on to Citigroup, Mr. Yamaguchi, please.

This is Yamaguchi from Citi. Can you hear me?

Yes. I can hear you very well. Please go ahead.

You talked about Rika in your presentation, all of which was being delivered to the hospitals. Consumables are all being -- started to be delivered if I understood. And it helped the profitability. But other businesses are also doing well. So it's kind of not clear in terms of Rika, how much contribution is done for the profit? Can you talk a little more about what was the upside on profitability from Rika was? How much is coming from Rika?

Well, thank you very much. As you have pointed out, yes, all the centers -- we delivered to all the centers. The revenue and the volumes are overall going up and the production volumes are also started to increase. So the efficiency for production, and the yields are all getting better. Therefore, that's what driving our profitability. So for TBCT business, so it's making a good contribution to the TBCT business as a whole.

Yes. But from the outside in, it's not clear, but you guys can see it from inside, right? Can you share how much is that contribution?

Well, there is no number that I can disclose to you. But of course, internally, Rika versus other businesses are just managed and tracked separately. But Rika's contribution is for sure, making a good contribution to the profit.

And you talked about -- the other question is you talked about prices a few times. So in the past, you've done it in the hospital business, and that was a clear win. And now C&V is doing that. So what is the -- from outside in, can you talk about that so that we can also understand when the pricing impact is happening?

Can I clarify your question? So how much pricing is...

Yes, from -- so from when to when? In hospital, I think the impact was started. There is a clear distinction between first half impact and second half impact. Can you just do something similar for C&V?

Okay. For C&V, our initial plan -- we have this initial plan for price impact. Yes, I would say the result is bigger than that coming also from North America and VBP has been delayed. That's also a positive. In Q1 for C&V, about JPY 2 billion was the impact primarily driven from upside, better than expectation was JPY 2 billion from price in Q1. But VBP is going to be expanding the scope as we predict. And in North America, some of the prices went up in Q4 last year. So JPY 2 billion as an impact will gradually taper down, gradually. So that's like how we see it. Last year in Q4, the price started to went up in Q4. So Q1 year-on-year, there's going to be some upside year-on-year. And VBP, China delay is working for positive right now.

Thank you very much. I'd like to now ask Kohtani-san from Mizuho Securities to ask your question, please.

My name is Kohtani from Mizuho. Can you hear me? I would appreciate for a little more of the quantitation Page 5, GP up because of the sales revenue up, but the sales, let's say, the JPY 8 billion may be a reasonable amount, but it appears to be a bit small. You included Rika, so consumables sales is putting up. And you used to be the total GP and the total sales, what about the gross margin? Can you give us a bit more of the breakdown?

Okay. Thank you very much. Well, the sales increase has been up and the gross margin has been up. Last year, there was a temporary factor kicking in namely. Before VBP introduction, people rushed by and C&V was pretty good in situation. So last year, Q1, excluding ForEx, 10% growth was achieved. That was good. So that was a bit temporary. And compared against that, the current Q1 appears to be less strong in terms of a simple calculation. But in terms of what we're shooting for this year, if you look at the gross margin and the business growth, we are pretty much in line with the plan. It's progressing well. And JPY 4.2 billion, the gross margin. Price-wise, the impact has been JPY 4 billion. And the remainder is from the remaining factors. So Q1, JPY 2 billion was expected, but, as I explained, that North America price up has been producing more effect and VBP has been delayed. So these 2 have been positive. Hence, JPY 2 billion more than we expected. And regarded the gross margin at price, the productivity has been up and VC score has been producing a positive effect. So these are the additional positive factors. And if you look at the plasma innovation, Rika, the more sales we achieved. There's been mixed effects. That's why you see slight negative factors -- negative numbers. So they're kind of offsetting each other.

Anyway, if you look the VBP, the impact was expected to be about JPY 4 billion. But for Q1, there is a little or the impact due to VBP was minimal?

VBP is spreading. So last year, second half, it started the expansion. And that's why we see slight negative numbers. But the JPY 4 billion -- out of the JPY 4 billion in Q1, there's been a minimal impact, but it's expanding.

Okay. Let me ask you another question. I hate to ask you questions, but the Olympus, there is so much attention going to Olympus. And MicroVention Costa Rica, September 2022, you received the FDA warning letter. Well, it's been quite a while, but catheter washing and the supplier, the components, let's say, the supplier corrective action reports need to be produced, and that was delayed, I suppose. So that's a detailed report, if I understood right. And MicroVention Costa Rica last year had another inspection. So it's been quite a while and 483 is yet to come. And then am I right to understand that the warning letter is getting into the past, you have been resolving the situation, the problem?

Yes, right. Well, last year, there was the follow-on inspection, and we had no additional request from the authorities. So when it comes to the additional request, we don't quite expect any.

Thank you very much. So let's move on to the next, Morgan Stanley, and Mr. Hayashi, your question, please.

My name is Hayashi from Morgan Stanley Securities. I hope you can hear me.

Yes, I do.

So I'm supposed to ask only 2 questions, right? So first question, at this point in time, so March 2026, your projection, you didn't make any changes of the final year's annual project forecast. Can you give me a little more nuances why you didn't change revise it for the full year? Now you talked about tariffs. You could potentially project less of the profitability because of the potential impact from tariffs. But in Q1, the impact -- positive impact price was bigger than expected. So even if there might be some impact from tariffs, price can go up, give more upside. Therefore, is that the reason why you didn't change the forecast for full year? That was my personal like perception of you. But is that the reason -- if you can imagine, is this wrong to imagine that that's the reason for not changing it?

Well, the impact for the tariff is going to be JPY 10 billion. That's a negative impact for JPY 10 billion. That's like our current projection. But as you said, there's an upside for Q1. And if you look at that as Otaka-san, my colleague had said, just this North American price impact will continue at least for Q3. If you think about it through and through, so JPY 10 billion if it's upside. Advances only about JPY 10 billion, then we should be able to offset that. And for that, we will also pass down those impact -- tariff impact to the price as much as possible. So there might be some negative impact, but the Q1 has upside, and we also can expect more upside for pricing. Therefore, we don't necessarily have to change the full year forecast. Therefore, we stay put this time.

Okay. Makes sense. My second question is in first quarter, there is expenses of the organization restructuring, if I understand correctly. But operating profit, when you put the plan for operating profit, there's an adjusted operating profit and the regular operating profit. Adjustment was starting out to be 0 at the very beginning, but there is an organizational change cost from Q1. And also, there is a guarantee from the pharmas kind of offsetting it. But organizational restructuring cost for Q2 and moving forward, do you think that will continue to recur in about the same size? And clinical medical production completed in third quarter. I mean, in third quarter, are you expecting special loss, onetime loss? Are you expecting any of the special loss, expecting that or not?

Well, thank you for your question. Reorganization costs, look, we are always looking at the businesses and the need to be flexible. We need to account for potential change of reorganization cost. But is this -- that impact is most of them or majority of it is coming from Quirem as you pointed out. So we are not expecting this to be continued, at least not in that side -- not at that size. So reorganization expenses were only happening, and it will close in Q2, end of Q2. Well, what we are expecting is majority will be complete by the end of Q1, majority.

Thank you very much. I'd like to now turn to Yoshihara-san from UBS Securities for your question.

My name is Yoshihara, UBS Securities. Let me ask you the first question. Is C&V, the profitability rate, this slide is AOP. Well, it really it can be either after or before the adjustment. And you were talking about the positive impact due to ForEx. And if I remember -- if I understood it correctly, even with that, I think the number has been higher than the past numbers. And I wonder if that kind of a high level will be sustainable. And before the tariff kick in, so much was produced. And the profitability rate has been very high, and this situation may not continue on in Q2 and forward. And tariff will kick in a lot in the second half of the year, but excluding such impact, the Q1 margin at this kind of a high level would be sustainable or not?

Thank you very much for your question. Regarding C&V, AOP 24 and plus 5, there's been a 5-point up. And as you mentioned, the ForEx has been favorable centering around the stock. So 2.2 point impact has been there so far. And excluding the kind of positive impact, it is still positive -- and it's partly because of the price up and the profitability management and production efficiency improvement. So these have been producing positive results. And regarding sustainable or not? Well, Q1 tariff impact has been almost 0. So Q2 and the second half, the tariff impact should begin. So throughout the year, 25% is our forecast, and we consider it should be achievable.

Okay. Let me confirm something. Tariff impact, you forecast the tariff impact and Ashitaka has been producing lots of products, and it's been profitable because of that?

No, it is not priced in.

Okay. Here's the second question. TIS, Interventional Systems, the U.S. has been performing very nicely. And last year Q3 2025, well, there was some production trouble last year. So that was at a high level. And as of May, you didn't say there should be huge growth, but the numbers that you are showing now are better than that. So what's going on? What kind of a background? For example, you have been trying to increase the market share or the market as a whole has been performing well? Of course, the unit price may be a factor, but -- and then, of course, the volume increase may be another factor. So can you give us the kind of a breakdown?

Thank you very much for your question. Well, as I went through during the presentation, price has been one factor, and the increased volume has been another contributing to increased sales and the profit. And if you look at the access profits in the oncology, in peripheral, in many areas, the sales revenue has been up. And the number of the cases covered are almost as high as pre-COVID-19. So number of patients has been up and the volume has been up, contributing to the great results. Also, you're not increasing the market share. Well, the products have been very powerful. So in North America, the marketed -- our products are highly rated, I put it that way. So of course, the market share has been seeing some contribution from those factors.

Thank you very much. So let's now move on to Macquarie Capital, Mr. Tony Ren, your question, please.

Yes, maybe just a quick follow-up question on Slide #15 here. You have -- on Slide #15, you have -- the second last row, you have lost compensation from a pharmaceutical company, JPY 3.2 billion. Just wanted to get some color on that one. Is that related to the German plan that you acquired from WuXi? Or is that related to the biosimilar product?

So thank you for your question. So this is not related to any of the newly acquired WuXi plant. This actually relates to the impact that we booked in Q4 when we canceled the project for some of the activities with the pharmaceutical companies. So this is -- we've continued the negotiations with the pharmaceutical companies. So there is some compensation for the write-off or the impairment that we have booked in Q4. So it's relatively more of a relationship towards the Q4 activity in last year that has -- we've been come to an agreement with the pharmaceutical company in this quarter.

So you will pay the -- so you will pay them JPY 3.2 billion?

No, it's the other way around. So we booked the impairments in Q4 last year. So they are compensating for that impact that we booked in Q4.

Thank you very much. Is there any other questions? Seems like there is no question. We'd like to close our Q&A and this closes FY 2026 financial -- first quarter for 2026 period will be over right now. Thank you very much for your attendance. [Statements in English on this transcript were spoken by an interpreter present on the live call.]